FX.co ★ GBP/JPY Wave Analysis for August 13,2012

GBP/JPY Elliott Wave
For the last few days the GBP/JPY pair was trading in a sideways move developing corrective wave 2 (coloured blue) of the bigger impulsive (3) wave (coloured green). During the Friday's Asian and European sessions we could observe a descending movement towards the 121.73 support level, and we can consider this move as the end of the corrective 2 wave (coloured green). Therefore, during the New York session this exotic currency did not manage to hold this level and the price started pushing higher when the development of the impulsive 3 wave (coloured blue) begun. In accordance with our wave rules and taking into account that the wave 3 retraces 161.8% of the wave 1, we can define the potential targets with Fibonacci extensions (121.03-123.20-121.73) with Take Profit 1 at 123.82(100% of wave 1) and Take Profit 2 at 125.08 (161.8% of wave 1) To reduce the risk, we can use support point at 121.70 as Stop Loss.
Support and Resistance
(S3) 121.34 (S2) 121.78 (S1) 122.05 (PP) 122.49 (R1) 122.93 (R2) 123.20 (R3) 123.64
Trading Forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the upward movement. That is why long positions at level 122.60 with Stop Loss 121.70 Take Profit 1 123.82 and Take Profit 2 125.08 are recommended.